PortalKota – GameStop Stock Explained For Dummies in 10 Minutes. Tesla bitcoin and now gme what the heck was going on for the past six months, stock market has been going up and down like a roller coaster, and when you turn on your news, these three magic letters seems to always part of these days.
So what is gmy? What is this frenzy all about in this video? I want to give you my version of this gme saga for those of you who have been following the financial news. You should have seen these keywords in the headlines.
A lot lately, gme robin hood reddit’s wall street, bets short selling, short, squeezing and etc.
The story of gme in recent weeks has been one of the most fascinating stories in 2021. So far, it’s basically the avengers vs thanos or david versus goliath.
Disclaimer. Here, though, i’m just trying to summarize this story in a simplified version, so it may not reflect the entire story and some of the information might be missing or not completely accurate, as the story continues to unfold, whether you’re, already in or plan to join the game.
Please do not make any investment decisions based on this video. You should do your own research before you make any investment and before we dive into the story deeper.
Let’s just briefly talk about gme, first gme or GameStop corporation as an american video game, consumer electronics and gaming merchandise, retailers based in texas.
Do you still remember back in the old days when we used to go to shopping malls or physical stores for everything it was basically where all the gamers would go to get their video games similar to our eb games in canada, and just like lots of retail Stores moving online video games are slowly shifting online storefronts and to no one’s surprise. Gme sales start to decline, and so did their stock price.
Think of blockbusters. They used to have retail stores all over the map, but here comes netflix and they are basically eliminating overnights at one point: gme even dropped to as low as four dollars per share and with the impact of covert last year, gmu was forced to close even more Storefronts, both within the states and internationally, and had to make huge layoffs.
As a result, gme became the target of short selling by many hedge funds. You may ask so thomas what is short selling to illustrate the concept of short selling. Let’S use this famous online example.
Let’S say right now: there are 5 bananas and each cost 10 dollars in the jungle and an ape has 5 bananas and then that’s a snake with no bananas, but he still wants to invest.
The snake believes that in the near future, the bananas can be bought at a discount say instead of ten dollars, they will drop to five dollars for each banana.
So right now the snake boils the five bananas from the eight for a while and then sells off at ten dollars each and when the bananas is worth five dollars, the snake buys the bananas back and return them to the ape.
So, in the end, the snake make five dollars profit on each banana, with no bananas to begin with, still falling. Let me bring it down even more so, basically, in a normal situation, when you invest in a company, you want that company to do well.
So, as the stock price goes up, your shares are gon na worth more. You want a win-win situation, however, if you are shorting the company, you are making a profit by betting.
The company would get screwed over. So, instead of win-win situation, it’s a zero-sum game, and is this ethical i’ll leave it up to you to decide whether this is ethical or not? This is exactly what a lot of investment firms and hedge fund managers are doing in the stock markets to make money.
What’S more because they control billions of dollars, they have the advantage of driving the stock price to the direction that they want. They can control the media or release alice reports driving down the stock price that they are trying to short.
So what happens if the prices of the banana doesn’t go down, but instead it goes up to say 20 per banana.
In that case, the snake has to forget twenty dollars to buy what’s available in the market, so the snake can return the bananas back to the ape and chances are if the jungle knows, the snake is desperately looking for bananas.
Other animals will also hide the bananas to make them less available on the market, forcing the snake to use even higher prices to buy the bananas back to the gme thing so about two years ago, gme has already become one of the short selling targets of these Investment companies.
However, since last year, people on this online forum called the wall street, bets things that the gme still has a chance to turn their business around if they can shift their business model online and increase their online presence.
So the stock price shouldn’t be as low as it was, and this makes the gme one of the more popular stocks among the retail investors. At the end of january 2021, a famous short seller named andrew left and his company citron research initiated another attempt to drive the price of gme down by saying that stock price should be worth no more than 20 dollars per share.
Citing back to the story earlier. Between the apes and the snake, some redditors from the wall street baths realized that the number of bananas – or, in this case the amount of gme shares that the snake promised to return to the apes is already well over.
The numbers of bananas available for the purchase on the markets if the apes can come together and buy all the bananas on the market at this time, the snake will have no choice but to buy bananas from the apes in order to return the bananas that they Promised to return earlier since the apes believe the snake has been taking advantage in this jungle all along it’s time for the apes, or in this case the retail investors to fight back the apes. Still remember what happened in 2008.
It was agreed of these snakes that caused the jungle to collapse. Most apes lost their home while the snake get the bait out. So now it’s time to teach the snake a lesson.
It’S not about money. It’S about sending a message. Did this happen before absolutely, but mainly between in business to business, where they rarely want each other to be completely dead? It’S just not at their best business interest.
So usually they just get settled in the end, but this time it’s different, this time is the average show versus the titans and thanks to the internet, the average show team up together and they want to break the wall street people’s banks.
What’S interesting is the snake? Cannot really look for negotiation this time because there isn’t a leader from the apes side. There are millions of apes gather around the world and each of them only own a small number of the bananas.
So next thing you know the apes collectively push the banana’s price to 20 times the price in january. Meanwhile, buying up both the common shares and car options.
Car options are basically contracts to give the apes the right to buy shares of the bananas in the future and the reason they do.
That is because they expected the future price of the bananas to go even higher, as opposed to the snakes bets of the bananas.
Go slower, this whole series of events drove up the price of the gme stock higher and higher, and at one point it was over 400.
Many relatives have claimed that they become millionaires because of this with some people making even a thousand times gains. However, the wall street hedge fund managers won’t just sit here and do nothing.
They continue to release reports and news without anything concrete to back up their claims in an attempt to make retail investors panic to sell their stocks.
What’S more they’ve teamed up with major stock brokerage to set limits on how many shares retail investors can buy for some of the highly discarded stocks on the wall street bets? In the end, they successfully driven down the stock price of the gme to under 100.
At the time i was making this video, but by limiting the retail investors on buying shares on certain companies, clearly violate the competition act.
So some senators have already asked the lawmakers and the sec to step in and file an investigation against trading platforms such as robinhood.
So we shall see how this plays out. This battle is far from over some people think this is just the beginning of a long-term battle between the retail investors and billions heirs on the wall street.
As of now, though, citroen research has publicly declared that they will discontinue short selling research after 20 years of publishing.
Meanwhile, some of the hedge funds has lost billions of dollars. Due to this gme short squeeze apes together, strong.
It appears that the apes have won round.
One of the battle, but how will this play out as anybody’s guess? So? What does this mean to all of us? My two cents are not to over trust the news and media because they can easily manipulate by the short sellers certain news that target-specific companies may be released with the goals to drive down the price of those companies.
So always do your own research and don’t invest more than you can afford to lose.
Are you doing this as a hobby, or are you risking your entire life saving into this? Remember before you invest, you need to know which investment is only for short term and which one is for the long term, if you’re not sure about what you’re doing, and you don’t like to deal with the market volatility.
It’S not a bad idea to just turn off the news and walk away for a while. All in all, it might be easier for you to talk to a professional to see what kind of investments are right for you.
Alright, this is it for today. Let me know what you think about the GameStop situation. I hope you enjoyed this video if you think the apes are gon na win, give this video a thumbs up or give it a thumbs down.
If you think that snakes were gon na win, neither way hope you learned a thing or two today this is thomas, and i will see you again in the next video.